“The diamond trade must accept the fact that diamonds are part of the real world and that diamond prices go up and down,” said Martin Rapaport, chairman of the Rapaport Group, in a statement. “Price volatility is to be expected and accepted as a normal part of doing business. Firms should develop strategies for dealing with downward moving markets.”

According to the Rapaport Research Report, Third Quarter Jitters, polished trading is now being driven by retail demand to satisfy current orders, with limited trading among dealers. Stretched Indian liquidity continues to impact trading with cash-strapped Indian suppliers willing to discount. Rough dealer trading is at a near standstill with De Beers goods being offered at deep discounts. While Chinese demand for diamonds and diamond jewelry continues to drive growth, the European debt crisis will have an impact globally.